ENERSYS
INC.


EMPLOYEE
STOCK PURCHASE PLAN


 


(Effective ____________, 2004)


 

















 


ARTICLE I


 


PURPOSE AND SCOPE
OF THE PLAN


Section 1.1             PURPOSE.


                                The EnerSys Inc. Employee Stock
Purchase Plan is intended to encourage employee participation in the ownership
and economic progress of the Company. 
This Plan meets the requirements of an employee stock purchase plan
within the meaning of Section 423 of the Code.


Section 1.2             DEFINITIONS.


                                Unless the context clearly indicates
otherwise, the following capitalized terms have the meaning set forth below:


                                “Board of Directors” means the board
of directors of the Company.


                                “Code” means the Internal Revenue
Code of 1986, as amended, and as the same may be further amended from time to
time, and the Treasury Regulations promulgated thereunder.


                                “Committee” means the Compensation
Committee of the Board of Directors, which shall administer the Plan as
provided in Section 1.3.


                                “Common Stock” means shares of Class
A Common Stock, par value $0.01 per share, of the Company.


                                “Company”
means EnerSys Inc.


                                “Compensation” means an Employee’s
salary or hourly base rate of pay, as the case may be, but excluding overtime
pay, bonuses, commissions, disability payments, workers’ compensation payments,
and any other payment in excess of normal salary or hourly base pay, received
by an Employee for services performed for the Company or a Subsidiary during an
Option Period.


                                “Continuous Service” means the period
of time, uninterrupted by a termination of employment, that an Employee has
been employed by the Company or a Subsidiary, or both, immediately preceding
the first day of the Subscription Period in which such Employee wishes to
participate in the Plan.  Such period of
time shall include any leave of absence permitted or required to be taken into
account by applicable Treasury Regulations.


 


2

















 


                                “Employee” means any common law
employee of the Company and any common law employee of a Subsidiary that has
been designated by the Committee as participating in the Plan.


                                “Enrollment Period” means each period
designated by the Committee during which eligible Employees may enroll in the
Plan.


                                “Exercise Date” means the last day of
each Subscription Period.


                                “Fair Market Value”  means, with respect to a Subscription Period
(a) if shares of Common Stock are purchased on the open market, the average
price paid per share of the Common Stock for all purchases pursuant to the Plan
related to that Subscription Period, and (b) if shares of Common Stock are
newly issued, the average of the high and low trading prices of the Common
Stock on the first business day following the last day of such Subscription
Period; provided that, if the Common Stock is not publicly traded, Fair Market
Value of the Common Stock shall be as determined by the Committee in good faith
and using such financial sources as it deems relevant and reliable.


                                “Human Resources” means the
department responsible for personnel matters pertaining to an Employee.


                                “Leave of Absence” means, for
purposes of participation in the Plan, an Employee’s sick leave or other leave
of absence approved by the Company, except that where the period of leave
exceeds 90 days and the Employee’s right to reemployment is not guaranteed by
statute or by contract, the Employee shall not be deemed on a Leave of Absence
as of the 91st day of such sick leave or other leave of absence, such
Employee’s employment relationship with the Company shall be deemed terminated,
and such Employee’s right to participate in the Plan and to purchase Common
Stock hereunder shall terminate.


                                “Offering Date” means the day
beginning at 12:01 a.m. on the first day of each Subscription Period.


                                “Option Period” means each period
beginning on an Offering Date and ending on the next succeeding Exercise
Date.  The initial Option Period shall
begin on the date of the initial public offering of the Common Stock.


                                “Option Price” means the purchase
price of a share of Common Stock hereunder as provided in Section 3.1.


                                “Participant” means any Employee who
(i) is eligible to participate in the Plan under Section 2.1 and
(ii) elects to participate.


 


3

















 


                                “Plan” means the EnerSys Inc.
Employee Stock Purchase Plan, as the same may be amended from time to time.


                                “Plan Year” means the
12-consecutive-month period beginning on January 1st and ending on the
following December 31st; provided, however, that the first Plan Year shall be a
short plan year commencing on the date of the initial public offering of the
Common Stock and ending on December 31, 2004.


                                “Stock Purchase Account” or “Account”
means an account established and maintained in the name of each Participant to
record the dollar amounts accumulated on such Participant’s behalf each Option
Period.


                                “Stock Purchase Agreement” means the
form prescribed by the Committee that must be executed by an Employee who
elects to participate in the Plan.  The
proper execution and filing of such form shall constitute the grant of an
option from time to time to the Employee in accordance with the terms of the
Plan and the terms of such form.


                                “Subscription
Period” means each calendar month; provided, however, that a short Subscription
Period shall start on the date of the initial public offering of the Common
Stock and shall end on the last day of the calendar month in which such initial
public offering occurs.


                                “Subsidiary” means any United States
corporation (other than the Company) in an unbroken chain of corporations
beginning with the Company if, at the beginning of an Option Period, each of
the corporations other than the last corporation in the unbroken chain owns
stock possessing 50 percent or more of the total combined voting power of all
classes of stock in one of the other corporations in such chain.


Section 1.3             ADMINISTRATION OF PLAN.


                                The Plan shall be administered by the
Committee.  Subject to direction by the
Board of Directors and the express provisions of this Plan, the Committee shall
be authorized to prescribe, amend, and rescind rules and regulations relating
to the Plan and the Committee’s administration thereof; to interpret the Plan;
to fix the terms of an offering under the Plan; to prescribe the maximum
percentage of payroll deductions permitted for a Subscription Period; to
restrict participation in the Plan consistent with any requirement of law or
regulation; to determine the Subsidiaries that participate in the Plan; and to
make all other determinations necessary to the administration of the Plan,
including appointment of individuals to facilitate the day-to-day operation
thereof.  The Committee’s determinations
as to the interpretation and operation of the Plan shall be final and
conclusive.  The Committee may delegate
any or all of its duties hereunder to one or more other persons, in which case
any reference to the Committee herein shall be deemed to refer to such person
or persons where appropriate.


 


4

















 


Section 1.4             EFFECTIVE DATE OF PLAN.


                                The effective date of the Plan is the
date of the initial public offering of the Common Stock, subject to the Plan
being approved by shareholders of the Company by a vote sufficient to meet the
requirements of Code Section 423(b)(2).


Section 1.5             TERMINATION OF PLAN.


                                The Board of Directors shall have the
right to terminate the Plan at any time. 
Upon any such termination, the dollar amount, if any, in each
Participant’s Account shall be distributed to such Participant.


ARTICLE II


PARTICIPATION


Section 2.1             ELIGIBILITY.


                                Each Employee, who on an Offering
Date (i) will have at least six (6) months of Continuous Service,
(ii) will be an Employee whose customary employment is more than five (5)
months in a calendar year, and (iii) will be an Employee whose customary
employment is more than 20 hours per week, may become a Participant by
executing and filing with Human Resources a Stock Purchase Agreement during an
Enrollment Period.  Such participation
shall begin on the next Subscription Period following Human Resources’s receipt
of a properly completed Stock Purchase Agreement.  Any election to participate shall be effective subject to the
Company’s Securities Transactions Policy or similar policy, if any, that may be
in effect at the time of such election. 
An election to participate shall continue in effect until termination of
participation occurs in accordance with Article V.


Section 2.2             PAYROLL DEDUCTIONS.


                                Payment for shares of Common Stock
purchased under the Plan shall be made solely by authorized payroll deduction
from each payment of Compensation in accordance with the Participant’s Stock
Purchase Agreement.  Deductions from
payroll shall be expressed as a percentage of Compensation (determined on the
first day of each Subscription Period) no greater than the percentage set by
the Committee, but shall not be less than 1% of such Participant’s
Compensation, per Option Period.  The
actual maximum percentage that may be fixed by the Committee shall be 15%.  A Participant may not increase or decrease
the percentage deduction during a Subscription Period (other than to withdraw
or terminate participation pursuant to Article V hereunder).  Subject to the Company’s Securities Transactions
Policy or similar policy that may be in effect at the time of such election,
however, a Participant may change the percentage deduction for any subsequent


 


5

















 


Subscription Period by
filing notice thereof with Human Resources during the time period described in
Section 2.1 for filing a Stock Purchase Agreement.  Amounts deducted from a Participant’s
Compensation pursuant to this section shall be credited to such Participant’s
Account.


Section 2.3             TRANSFER OF PAYROLL DEDUCTIONS.


                                All payroll deductions withheld by a
Subsidiary under the Plan shall be immediately transferred to the Company.


Section 2.4             LEAVE OF ABSENCE.


                                If a Participant goes on a Leave of
Absence, such Participant’s participation in the Plan shall continue provided
that such Participant continues to receive Compensation.  If such Participant ceases to receive
Compensation while on a Leave of Absence, such Participant’s participation
shall automatically terminate.


ARTICLE III


PURCHASE OF SHARES


Section 3.1             OPTION PRICE.


                                (a)           The
Option Price for a Subscription Period shall be the Fair Market Value of a
share of Common Stock with respect to that Subscription Period.


                                (b)           The
Company shall pay any brokerage fees, commissions and other transaction
expenses up to a maximum of 5% of Fair Market Value of the purchased
shares.  The Participant shall be
responsible for paying any additional brokerage fees, commissions and other
transaction expenses as a condition to the closing of the purchase of shares of
Common Stock hereunder.


Section 3.2             PURCHASE OF SHARES.


                                As of the date that all purchases
under the Plan with respect to a particular Subscription Period are made, the
amount in a Participant’s Stock Purchase Account shall be charged with the
aggregate Option Price of the largest number of shares of Common Stock
(including fractional shares) that can be purchased with such amount.


 


6

















 


Section 3.3             LIMITATIONS ON PURCHASE.


                                No Participant shall purchase Common
Stock hereunder in any calendar year having a Fair Market Value of more than $25,000,
provided that any such purchase shall not exceed the limitations imposed by
Code Section 423(b)(8).  Further,
no Participant shall purchase Common Stock hereunder if, by reason of such
purchase, such Participant shall be deemed to possess five percent (5%) or more
of the total combined voting power or value of all classes of stock of the
Company or a Subsidiary.  For purposes
of the preceding sentence, the rules of Code Section 424(d) shall apply
and Common Stock that a Participant may purchase under outstanding options
shall be treated as stock owned by the Participant.


Section 3.4             RESTRICTION ON TRANSFERABILITY.


                                Rights to purchase shares hereunder
shall be exercisable only by the Participant. 
Such rights shall not be transferable and shall expire upon a
Participant’s death.


ARTICLE IV


PROVISIONS
RELATING TO COMMON STOCK


Section 4.1             COMMON STOCK RESERVED.


                                Except as provided in
Section 4.2, no more than one million (1,000,000) shares of Common Stock
may be sold pursuant to options granted under the Plan.  Such number shall be subject to adjustments
effected in accordance with Section 4.2.


Section 4.2             ADJUSTMENT FOR CHANGES IN COMMON
STOCK.


                                (i) 
In the event that the shares of Common Stock of the Company as presently
constituted, shall be changed into or exchanged for a different number or kind
of shares of stock or other securities of the Company or of another corporation
(whether by reason of merger, consolidation, recapitalization,
reclassification, split-up, combination of shares or otherwise) or if the
number of such shares of Common Stock shall be increased or decreased through
the payment of a stock dividend, stock split, or reverse stock split, then,
subject to the provisions of subsection (iii) below, there shall be
substituted for or added to each share of Common Stock that was theretofore
appropriated, or that thereafter may become subject to an offering under the
Plan, the number and kind of shares of stock or other securities into which
each outstanding share of the Common Stock shall be so changed or for which
each such share shall be exchanged or to which such share shall be entitled, as
the case may be.  Outstanding Stock
Purchase Agreements shall be deemed to be amended as to price and other terms,
as may be necessary to appropriately reflect the foregoing events.


 


7

















 


                                (ii) 
If there shall be any other change in the number or kind of the
outstanding shares of Common Stock, or of any stock or other securities in
which such stock shall have been changed or for which it shall have been
exchanged, and if a majority of the members of the Board of Directors shall, in
its sole discretion, determine that such change equitably requires an
adjustment in any offering that was theretofore made or that may thereafter be
made under the Plan, that such adjustment shall be made in accordance with such
determination.


                                (iii)  An offering pursuant to the Plan shall not affect in any way the
right or power of the Company to make adjustments or reclassifications,
reorganizations or changes in its capital or business structure, to merge, to
consolidate, to dissolve, to liquidate, or to sell or transfer all or any part
of its business or assets.


Section 4.3             INSUFFICIENT SHARES.


                                If the aggregate funds available for
the purchase of Common Stock with respect to any Subscription Period would
cause an issuance of shares in excess of the number provided for in
Section 4.1, (i) the Committee shall proportionately reduce the
number of shares that would otherwise be purchased by each Participant in order
to eliminate such excess, (ii) any cash remaining in each Participant’s Stock
Purchase Account shall be distributed to such Participant as soon as reasonably
practicable, and (iii) the Plan shall automatically terminate immediately
after such Subscription Period.


Section 4.4             CONFIRMATION OF PURCHASES;
REGISTRATION OF SHARES.


                                Each Participant shall be provided
with a written statement at such times as determined by the Committee
indicating the number of shares of Common Stock purchased under the Plan by the
Participant, the aggregate number shares of Common Stock accumulated under the
Plan by the Participant, and other relevant information with respect to the
Participant’s participation in the Plan. 
All shares purchased shall be credited to such Participant, but shall
initially be registered in the name of the Company’s nominee, as agent for the
Participant.  Such nominee will hold the
Participant’s share certificates until such time as such Participant’s
participation in the Plan terminates or such Participant files a written
request with the nominee to have a certificate or certificates issued in such
Participant’s name.  Except in the case
of death, any certificate issued to a Participant must initially be issued in
the Participant’s name alone or in such Participant’s name and another as joint
tenants with right of survivorship. 
Registration of any shares following the death of a Participant will be
subject to the same rules as are then applicable to decedent shareholders
generally.


 


8

















 


Section 4.5             RIGHTS AS SHAREHOLDERS.


                                The shares of Common Stock purchased
by a Participant with respect to a Subscription Period shall, for all purposes,
be deemed to have been purchased as of the day such shares are first owned by
the Participant.  Participants for whom
shares have been purchased shall be entitled to all rights of a shareholder
with respect to such shares, including the right to receive dividends and the
right to vote.  The Company will take
such steps as may be necessary to ensure that each Participant whose shares are
held in name of the Company’s nominee enjoys such rights.  The Participant shall be responsible for
payment of all transaction fees related to shares of Common Stock arising after
the date such shares are purchased hereunder.


Section 4.6             CORPORATE REORGANIZATIONS,
LIQUIDATION, ETC.


                                In the event of any corporate merger,
consolidation, acquisition of property or stock, separation, reorganization, or
liquidation, provision may be made (but is not required to be made) for the
substitution of a new option for an old option, or an assumption of an old
option, by an employer corporation or a corporation related to such
corporation.  Any provision for such
substitution or assumption shall be subject to the limitations and provisions
of Code Section 424.


ARTICLE V


TERMINATION OF
PARTICIPATION


Section 5.1             WITHDRAWAL.


                                Subject to the Company’s Securities
Transactions Policy or similar policy that may be in effect at the time, a
Participant may withdraw from the Plan at any time by filing notice of withdrawal
with the Company’s nominee prior to an Offering Date.  In such event, the dollar amount, if any, in such Participant’s
Stock Purchase Account shall be distributed to such Participant (or in the case
of death, to such Participant’s designated beneficiary(ies)) and no further
shares will be purchased on such Participant’s behalf unless such Participant
is eligible to enroll and again enrolls in the Plan effective as of the
beginning of a subsequent Subscription Period by filing a Stock Purchase
Agreement as set forth in Section 2.1.


Section 5.2             TERMINATION OF ELIGIBILITY.


                                If a Participant ceases to be
employed by the Company or a Subsidiary or otherwise becomes ineligible to
participate in the Plan as set forth in Section 2.1, such Participant’s
participation in the Plan shall thereupon automatically terminate.  In such event, the dollar amount, if any, in
such Participant’s Stock Purchase Account shall be distributed to such
Participant (or in the case of death, to such Participant’s


 


9

















 


designated beneficiary(ies))
and no further shares will be purchased on such Participant’s behalf.  For purposes of this section, a
Participant’s participation in the Plan will not automatically terminate if
such Participant becomes an individual on a Leave of Absence permitted or
required to be taken into account by applicable Treasury Regulations or other
law unless provided otherwise in Section 4.2. 
Any Participant whose participation in the Plan is terminated pursuant
to this Section may again become a Participant as of the beginning of a new
Subscription Period by satisfying the eligibility requirements and executing
and filing a Stock Purchase Agreement as set forth in Section 2.1.


Section 5.3             NO INTEREST.


                                No interest will be credited or paid
on cash balances in a Participant’s Stock Purchase Account.


ARTICLE VI


GENERAL PROVISIONS


Section 6.1             TAX WITHHOLDING; INFORMATION
RETURNS.


                                Each Participant shall be deemed to
have consented to any income tax withholding that may hereafter be required by
reason of such Participant’s participation in the Plan or the disposition of,
or payment of any dividends on, shares acquired by such Participant under the
Plan.  The proper officers of the
Company and each Subsidiary shall prepare and, where required, timely file such
tax information returns and other notices as may be required by law from time
to time.


Section 6.2             NOTICES.


                                Any notice that an Employee files
pursuant to the Plan shall be made on forms prescribed by the Committee and
shall be effective as soon as administratively possible after such notice is
received by Human Resources or by the Company’s nominee, as the case may be.


Section 6.3             CONDITION OF EMPLOYMENT.


                                Neither the creation of the Plan, nor
participation therein, shall be deemed to create any right of continued
employment or in any way affect the right of the Company or a Subsidiary to
terminate an Employee.


Section 6.4             AMENDMENT OF THE PLAN.


                                The Board of Directors may at any
time, and from time to time, amend the Plan in any respect, except, that
without approval of the Company’s shareholders, no amendment may
(i) increase the aggregate


 


10

















 


number of shares
permitted to be reserved by the Board of Directors under the Plan other than as
provided in Section 4.2, (ii) materially change the Plan benefits provided
for herein, (iii) change the definition of a Subsidiary, or
(iv) materially change the eligibility requirements for Employees.  Any amendment of the Plan must be made in
accordance with applicable provisions of the Code.


Section 6.5             APPLICATION OF FUNDS.


                                All funds received by the Company by
reason of a purchase of shares hereunder may be used for any corporate purpose.


Section 6.6             LEGAL RESTRICTIONS.


                                The Plan, the grant and exercise of
options to purchase shares of Common Stock under the Plan, and the Company’s
obligation to sell and deliver shares upon the exercise of options to purchase
shares shall be subject to all applicable federal, state and foreign laws,
rules and regulations, and to such approvals by any regulatory or governmental
agency as may, in the opinion of the Company, be required.


Section 6.7             NUMBER.


                                Whenever used herein, singular words
shall include the plural, and vice versa, as the context requires.


Section 6.8             GOVERNING LAW.


                                Except to the extent preempted by
Federal law, the Plan and all rights and obligations thereunder shall be
construed and enforced in accordance with the domestic internal law of the
State of Delaware.


 


11